Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Early Investors set to win big as FDA fast-tracks this ancient medicine - 3rd Dec 20
New PC System Switch On, Where's Windows 10 Licence Key? Overclockers UK OEM Review (5) - 3rd Dec 20
Poundland Budget Christmas Decorations Shopping 2020 to Beat the Corona Economic Depression - 3rd Dec 20
What is the right type of insurance for you, and how do you find it? - 3rd Dec 20
What Are the 3 Stocks That Will Benefit from Covid-19? - 3rd Dec 20
Gold & the USDX: Correlations - 2nd Dec 20
How An Ancient Medicine Is Taking On The $16 Trillion Pharmaceutical Industry - 2nd Dec 20
Amazon Black Friday vs Prime Day vs Cyber Monday, Which are Real or Fake Sales - 1st Dec 20
The No.1 Biotech Stock for 2021 - 1st Dec 20
Stocks Bears Last Chance Before Market Rally To SPX 4200 In 2021 - 1st Dec 20
Globalists Poised for a “Great Reset” – Any Role for Gold? - 1st Dec 20
How to Get FREE REAL Christmas Tree 2020! Easy DIY Money Saving - 1st Dec 20
The Truth About “6G” - 30th Nov 20
Ancient Aztec Secret Could Lead To A $6.9 Billion Biotech Breakthrough - 30th Nov 20
AMD Ryzen Zen 3 NO UK MSRP Stock - 5600x, 5800x, 5900x 5950x Selling at DOUBLE FAKE MSRP Prices - 29th Nov 20
Stock Market Short-term Decision Time - 29th Nov 20
Look at These 2 Big Warning Signs for the U.S. Economy - 29th Nov 20
Dow Stock Market Short-term and Long-term Trend Analysis - 28th Nov 20
How To Spot The End Of An Excess Market Trend Phase – Part II - 28th Nov 20
BLOCKCHAIN INVESTMENT PRIMER - 28th Nov 20
The Gold Stocks Correction is Maturing - 28th Nov 20
Biden and Yellen Pushed Gold Price Down to $1,800 - 28th Nov 20
Sheffield Christmas Lights 2020 - Peace Gardens vs 2019 and 2018 - 28th Nov 20
MUST WATCH Before You Waste Money on Buying A New PC Computer System - 27th Nov 20
Gold: Insurance for Prudent Investors, Precious Metals Reduce Risk & Preserve Wealth - 27th Nov 20
How To Spot The End Of An Excess Market Trend Phase - 27th Nov 20
Snow Falling Effect Christmas Lights Outdoor Projector Amazon Review - 27th Nov 20
4 Reasons Why You Shouldn't Put off Your Roof Repairs - 27th Nov 20
Further Clues Reveal Gold’s Weakness - 26th Nov 20
Fun Things to Do this Christmas - 26th Nov 20
Industries that Require Secure Messaging Apps - 26th Nov 20
Dow Stock Market Trend Analysis - 25th Nov 20
Amazon Black Friday Dell 32 Inch S3220DGF VA Curved Screen Gaming Monitor Bargain Deal! - 25th Nov 20
Biden the Silver Bull - 25th Nov 20
Inflation Warning to the Fed: Be Careful What You Wish For - 25th Nov 20
Financial Stocks Sector ETF Shows Unique Island Setup – What Next? - 25th Nov 20
Herd Immunity or Herd Insolvency: Which Will Affect Gold More? - 25th Nov 20
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

The Indian Gold Train is Leaving the Station ...

Commodities / Gold & Silver Jul 09, 2008 - 01:38 AM GMT

By: Alex_Wallenwein

Commodities Best Financial Markets Analysis ArticleIndians who sold their gold in 2007 to buy stocks are now paying out the wazoo for their gross misjudgment. In January of 2008, the Bombay Stock Exchange fell by more than 4,000 points. It is now a full 8,000 points short of its January 8th peak,


while gold is $70 higher than it was then.

Ironically, on January 17th, the article Indians Sell Gold – and their Future was published. The following day, the Bombay Stock Exchange (BSE) lived up to its name and bombed from 21,000 all the way down to 17,000.

The BSE has never recovered.

It most recently has desperately tried to cling to the 14,000-level in hopes of avoiding further drops down to 9,000 and below – and failed, only to slip down to 13,000. That's the same level where it was in November of 2006, twenty months ago. At that time, gold stood at around $470. Now, gold costs nearly twice as much.

Most of the gains the Indian stockists enjoyed since then are now little more than vapors in their memory. All of the gains of gold since then are still there. Maybe diversifying into some stocks in addition to gold would have made better sense – but selling gold for regular stocks?

Ouch!

They should have known better.

Accompanying the BSE on it trip down south are the hopes of Indian retail investors who hoped to get rich off the BSE's until then prodigious rise. Riding along in the passenger seat on that trip are the yearnings of Indian jewelers and traditional gold buyers for lower gold prices.

What's the lesson? It pays big bucks to ignore the siren song of the paper-pushers: "Come, my poor peasant friend. Sell your clumsy gold and open a brand-new bank account with us. Then, you can buy and sell Indian stocks through our in-house brokerage service and support your country's powerful economy."

Now, the gold is gone, and so is much of the money they sunk into their paper stocks. What will Indians do? Will they return to gold?

In June, Indian gold buying dropped to a third of what Indians bought during June a year ago. They are still waiting for lower prices. Doesn't seem to be happening. Lower than now, maybe – but lower than the $650/oz. in June of 2007? Forget it!

The Future

What willl the future bring? Will the BSE recover its erstwhile glory? Will it return to outshine gold?

The BSE's blue 50-day moving average has fallen way below the red 200-day MA, and its descent is accelerating. Gold, on the other hand, has never touched its own 200-DMA, and its 50-DMA rests securely above its longer term colleague and has recently turned north again.

So, will Indians return to their traditional gold buying habits, then?

Right now, it doesn't look that way. The stock market has further ground to lose, so those unsophisticated enough to hang on in hopes for better times will be hurt even more. Those who sell now or who recently sold their stock positions are already hurting. The rupee is weak and looks ready to fall further against the dollar, so that will make higher gold prices doubly unpalatable to them.

Quite possibly, it will take massive across-the-board price inflation to steer Indians back to the gold market, like the 25% inflation figures in Vietnam, for example. Vietnamese have been the largest gold importers in Q1 of this year – and that's in absolute terms, not per capita!

What do the Vietnamese know that Indians don't - or forgot?

However expensive Indians may perceive gold to be right now, it would be wise for them to put whatever disposable income, cash (and stock) assets they have back into gold. The rupee's fall makes holding cash unattractive. Equities are falling and so are Indian treasuries due to high inflation expectations.

Gold and silver will be some of the few things worth sinking money into - regardless of price - because the price of leaving their money in falling assets is obviously even higher. It only gets more and more expensive as time moves on.

Gold is rising even without India's traditional buying levels of approximately three times what they are now. The Indian gold train is moving and pulling out of the station. The more speed it gathers, the harder it will be to jump back on.

Hesitating any longer will be more expensive than gold could ever hope to be. In fact, logic would dictate that the more expensive gold gets, the more it will cost those who decide to wait before they buy it - in terms of lost profits. The same thing goes for all investors, of course, not only Indians.

Got gold?

Alex Wallenwein
Editor, Publisher
The EURO VS DOLLAR MONITOR

Copyright © 2008 Alex Wallenwein - All Rights Reserved

Alex holds a B.A. degree in Economics and a juris doctorate in Law. His forte is research. In late 1996, he began to research how money is used by some to exert political and economic control over others' lives. In the process, he discovered that gold (along with silver) is the common man's antidote to this effort. In writing and publishing the Euro vs Dollar Monitor, he explains the dynamics of this process and how individuals can harness the power of gold in their efforts to regain their political and financial autonomy.

Just like driving your car, investing only makes sense if you can see where you are going. The Euro vs Dollar Monitor is the golden windshield wiper that removes the media's greasy film of financial misinformation from your investment outlook. Don't drive your investment vehicle without it!

Alex Wallenwein Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules